Residents in Lleida paid over €12 million in additional income tax last year, a direct result of the Spanish government's decision not to adjust income tax (IRPF) brackets for inflation. This phenomenon, known as 'cold progression', occurs when tax thresholds remain unchanged despite an increase in the cost of living.
Nationally, this policy generated an extra €2.3 billion in tax revenue, according to the Annual Progress Report submitted by the Ministry of Economy to the European Commission. Since 2022, inflation has risen by approximately 15%, eroding the purchasing power of taxpayers. While salary increases have aimed to mitigate this, nominal pay rises can push individuals into higher tax brackets, leading to increased tax payments and no real improvement in their financial standing.
In the document sent to Brussels, the government explained that the 'non-deflation of IRPF tax bases' has led to 'an increase in revenue of more than 0.1% of GDP', as reported by La Vanguardia. The State collected an additional €1.137 billion from this non-adjustment, with autonomous communities receiving an extra €1.157 billion.
Refusal to Adjust Tax Brackets
Both the Spanish Treasury and the Catalan government have so far refused to adjust their respective IRPF tax rates. They argue that such a measure would disproportionately benefit higher earners. However, various political parties and sectors have called for tax base updates, stating that the current approach amounts to a hidden tax increase that mainly affects middle-income earners.
During the current legislative term, the central government has not implemented any major fiscal reforms. However, it has modified several specific taxes, such as the temporary solidarity tax on large fortunes. This measure, along with the non-deflation of IRPF, has generated an extra €6.2 billion for the Treasury, according to calculations sent to Brussels.
These revenue increases mean the government has been collecting the equivalent of 0.39% of GDP since last year. This aligns with the medium-term structural fiscal plan agreed upon with the European Commission in late 2024, which included a commitment to raise public revenue to 0.4% of GDP.
Lleida's Tax Revenue Soars
In Lleida, the Tax Agency's revenue surged by 14.9% last year, reaching a new record of €1.654 billion. The primary driver of tax collection in the Lleida region remains the Personal Income Tax (IRPF), which brought in over €762 million, a 15.4% increase.
The second largest source of revenue for the Treasury in the province was Value Added Tax (IVA), totalling €529.74 million. This marked a 19.7% rise compared to 2024 figures.
